Types of Health Insurance
Our own well being is of paramount importance and as fit and healthy as we are, or at least believe we are, there is just no telling when we may need some sort of medical treatment. Assuming that we won't ever need any is a very big and very foolish risk that too many of us take. Asking yourself 'do I need health insurance?', sooner rather than later, is a wise move.
Using the USA as an example:
Managed Care plans
Managed care means pretty much what the name says, a managed amount of care so that insurers can keep a tab on their costs. If you needed to visit a hospital, some forms of managed care may mean that the insurer will have to approve the visit first to validate the need for the treatment. Without getting the approval the cost may not be covered.
Fee for service plans
This is the most common kind of health insurance policy. The insurer pays a fee of what is incurred for medical services to do with the people on the health insurance plan. This choice offers the widest range of practitioners/doctors and hospitals available. With little exception you can choose any doctor or hospital where ever you may be in the country.
Depending which country you live in the range of cover that is available is different but fundamental plans are the same worldwide.
The insurer will not pay the whole fee but part of it.
Each year a set amount of money is paid for by the insured (this is referred to as the deductible) before insurance payments begin. For example for each life insured on the plan there may be a $200 deductible, or if a whole family is insured then a collective deductible of $400 when 2 or more people have reached the individual figure. This is applicable each year the policy runs. It may be that not every expense counts towards your deductible BUT the specifics of the plan will highlight this before you take it out, and this is a very important thing to check before committing to a policy.
After you have covered the above deductible each year, any bills that followed are shared with your insurer. This is not necessarily 50/50 it can be 80% paid by the insurer.
To receive the insurers obligation you will have to complete the relevant paperwork each time for the insurer to verify, it is possible that the medical establishment that you are dealing with will do it for you. Any receipts for medication and separate related costs you must keep as the insurer will require sight of these at some point too. It is your responsibility to keep these safe and in order.
There are limits to the amount that your insurer will pay when you claim especially when for instance a couple make a claim under 2 separate insurance policies. There will be a clause that will prevent more than 100% of the claim being paid across the 2 policies.
To the customer's benefit there is usually a limit to how much they will have to pay in any one year this can be anywhere between $1,000 and $5,000. The insurer will then pay the rest of any expenses covered by the policy. This amount does NOT include what you pay as monthly, quarterly or annual premiums.
It is vitally important before you take out a policy that you know exactly what is covered or perhaps more importantly, what not is covered.
The two kind of fee for service plans are called 'basic' and 'major medical'.
Basic cover contributes towards the cost of hospital rooms and the care you receive while at the hospital. It covers some services provided by the hospital such as prescription drugs or scans. This type of cover also pays toward the cost of surgery whether or not it is performed at the hospital or not. It can also cover certain visits made by a practitioner/doctor.
Major medical cover carries on from the basic cover and pays towards the cost of long term and expensive illness or injury.
It is possible to combine both types of cover into one plan and this is referred to as a 'comprehensive plan'.
Health Maintenance Organisations
A Health Maintenance organization is a pre-paid health plan. As a member of this plan you pay a monthly premium for comprehensive care for you and also your family. This covers hospital visits, emergency treatment, surgery, lab tests, x-rays, therapy and practitioner/doctor's visits.
The Health maintenance organisation arranges for the care directly or at a hospital/surgery that they have a contract with. Where your care takes place is down to where the health maintenance organisation has their contracts. Exceptions are only made in emergency circumstances.
It is possible that there will be a small fee for each time a doctor or hospital is visited and this can be around $20. The total costs incurred are typically lower for this type of plan that a fee for service plan.
Bearing in mind that the fee is fixed for this type of plan it is beneficial to the provider that you get basic health care as any problems that become more serious will be at their expense. They can offer preventative cover but again what is included should be checked thoroughly before you commit to a contract.
There are no claim forms or paperwork required for hospital stays or doctors visits, a membership card is all that is needed.
It is possible that on this type of plan, due to the restriction in available venues and doctors/practitioners, that you may have to wait longer for an appointment.
Commonly in Health maintenance organisations you will be allocated a doctor/practitioner who will be your primary care doctor/practitioner, although it may be possible for you to choose from the organisations list of contracted doctors/practitioners. They will keep an eye on your general health and provide you will the majority of your care, making a referrals only when needed. It is generally not possible to see any form of specialist without first being referred by this doctor. This a limitation on your choices.
Point of Service Plans
Many Health maintenance organisations offer an indemnity type option. The primary care doctors in this type of contract generally make referrals to other providers in the plan. However it is possible to refer yourself to another doctor/practitioner and still remain covered.
If the doctor/practitioner makes a referral to a third party outside of their network the plan will cover most if not all of the bill. You may have to contribute if you refer yourself to a provider outside of the network.
Preferred Provider Organisations
The preferred provider organisations is a combination of fee for service and health maintenance organisation plans. Like the latter there are only a certain amount of doctors/practitioners and hospitals available. When you choose one of these most of your medical bills are covered.
Under this type of plan you will present a membership card as opposed to completing any paperwork and again it is possible that on each visit you will have to make a small payment.
You will need to choose a primary care doctor just like in a health maintenance organisation plan to have your health monitored.
You can use doctors who are not under the preferred provider organisation's network and still receive some benefit from the plan but it is likely that you will have to pay the majority of the fee. This can be preferable if you do not want to change doctors from the one you have prior to taking the insurance out.
In the UK there is of course the National Health Service(NHS) so health insurance is for private care, it is also referred to as private medical care. This means you are not on a waiting list with everybody else and you get the best treatment where and when you require it and in a private establishment.
The contracts available in the UK and other parts of the world are not identical to those highlighted above, however what is covered and how the plans work bear distinct similarities.
Having health insurance in place is peace of mind that we all need and deserve, not just for ourselves but for our families.
Now you have hopefully realised that the answer to the question 'do I need health insurance?' is 'yes'!
It is vital to contact an insurer directly or an independent financial adviser before you go ahead and take out this or any other kind of insurance.
